U.S. Economic Data in Focus as Markets Recover

The EUR/USD pair is consolidating after reaching its highest level since late May during Thursday’s Asian session, with buyers turning cautious near the 1.1700 level. The US Dollar  has stabilized after sliding to a three-month low in the previous session, helped by renewed support from hawkish Federal Reserve signals and geopolitical risks.

The July 28-29 FOMC Minutes showed that several Fed officials saw a need to raise interest rates soon unless inflation makes further progress toward the central bank’s target. Expectations for higher borrowing costs are also supported by renewed inflation concerns linked to elevated oil prices, while geopolitical tensions continue to boost demand for the safe-haven USD.

US President Donald Trump said Washington would launch a major economic operation against Iran and threatened severe financial penalties against countries helping Tehran circumvent sanctions. Meanwhile, the US and Iran remain at odds over the Strait of Hormuz, keeping geopolitical risk elevated and supporting both crude oil prices and the Greenback.

Despite the USD recovery, downside risks for EUR/USD remain limited as markets continue to anticipate another European Central Bank rate hike at its September meeting. Expectations for further ECB tightening could provide additional support to the Euro and reinforce the pair’s bullish outlook.Top of Form

Gold prices are holding near the $4,500 level after easing from a recent high, with lower long-term US Treasury yields following the expansion of the government’s bond-buyback programme continuing to support bullion.

A softer US Dollar is also helping limit the downside, while traders assess the Federal Reserve’s latest signals on inflation and interest rates.

The Treasury’s decision to increase certain buyback operations has pushed longer-dated yields lower, improving the appeal of non-yielding Gold. Meanwhile, the Fed’s July meeting minutes showed that policymakers remain concerned about inflation, with several officials open to higher rates if price pressures fail to ease toward the 2% target.

Strong central-bank demand and persistent economic and geopolitical uncertainty are also providing longer-term support for bullion.

Oil prices extended their gains on Thursday, with Brent and WTI rising for a fifth consecutive session as the prolonged US-Iran conflict continued to raise concerns over disruptions to Middle Eastern supplies.

Both benchmarks settled at their highest levels since July 24 on Wednesday, supported by ongoing tensions and uncertainty over efforts to end the conflict. Market participants remain cautious as peace talks have stalled, while sporadic attacks continue to threaten regional energy flows.

The UAE’s decision to suspend financial and economic transactions with Iran has added to concerns over regional relations. At the same time, conflicting statements over the status of the Strait of Hormuz have heightened uncertainty around shipping through the key oil transit route.

Supply pressures have also affected refined fuel markets, with US distillate inventories falling for a third consecutive week. However, the latest data showed US crude inventories increased by 4.4 million barrels in the week ended August 14, compared with expectations for a 600,000-barrel decline, limiting some of the upside in oil prices.

Wall Street closed higher on Wednesday, snapping a three-session losing streak as a sharp decline in long-term Treasury yields helped offset weakness across technology stocks.

the main boost came from the bond market after the U.S. Treasury announced it would double the size of its buyback operations for longer-dated government bonds from $2 billion to $4 billion per operation.

Long-term Treasury yields had climbed sharply since the Federal Reserve’s July meeting amid renewed inflation concerns, higher oil prices and heavy debt issuance by major technology companies to finance artificial intelligence infrastructure. The decline in yields provided some relief for equities, although technology and semiconductor stocks remained under pressure.

Meanwhile, the Federal Reserve’s July meeting minutes showed that many policymakers could support rate hikes if inflation fails to ease.

Among individual stocks, Moderna surged around 177% after its melanoma treatment with Merck achieved positive late-stage trial results, while Merck gained 12.6%. Target advanced after raising its annual sales outlook, while Lowe’s gained despite trimming its full-year revenue guidance.